Gordon Campbell on the TPP outcome, and the Hobbit law

Gordon Campbell on the TPP outcome, and the
Hobbit law

published on Werewolf

tpp-hobbit-biggerWhen even Justin Trudeau
seems willing to abandon you by the wayside, you know
you’re in trouble. Yet somehow the Trans Pacific
Partnership trade deal has come lurching back from the dead
– and as predicted in this column last week, the member
countries gathered in Vietnam have announced a deal in broad
principle, shunted aside until a later date the stuff on
which they don’t agree, and declared victory.

actual conclusion is still months away, at the earliest. In
the coming weeks, the full content of the changes agreed in
Da Nang will emerge – and crucially, so will the timetable
for the ratification, signing process and implementation
period that’s now envisaged. Will our Parliament get an
opportunity to ratify this new deal before – or only after
– it is signed? Will this new version go ‘live’ once
we sign it, or will its terms be activated only after the
last country involved ratifies the deal and turns on the
lights? (According to some reports the deal goes ‘live’
once any six members have ratified it.)

Additionally, and
even after the still-problematic bits have been ironed out,
what is the run-in time envisaged before the new version take
effect? Reportedly, some 20 clauses in the original deal
(eleven of them affecting intellectual property rights) have
been “frozen” until such time as the US may re-enter the
deal. Given Donald Trump’s current attitude, this will
have to be under a different President.

If and when that
happens, will the US have to re-negotiate the re-activation
of those 20 frozen clauses? Or will they kick in
automatically once Congress has ratified the re-entry?
(Note: the ‘fast track’ presidential authority won by
Barack Obama to ratify the TPP is up for renewal in 2018,
for another three year term. Given the current mood in
Washington – which is increasingly hostile to fast track
and to multilateral trade deals – every clause of the TPP
may well be exposed to be re-litigation by Congress as early
as 2018, and certainly so by the next US administration in
2021 if the frozen version of the TPP remains in limbo at
that time. In sum, we can safely assume the US are out of
this pact for good. )

So… what have been the main
changes between the TPP deal that the Key/English government
bequeathed to the Ardern administration, and what we’re
now facing.

Foreign-owned housing.
Despite the previous government claiming for years that it
couldn’t be done, the new government has – within a
fortnight – found a mechanism within our domestic
legislation ( its in the Overseas Investment Act) to ban
foreigners from buying existing homes here. That’s good.
We were lied to, previously.

Investor State
Dispute Settlement (ISDS)
These dispute resolution
measures enable firms to sue government for passing laws
that impinge on the real or expected profits from
investment. The goal of removing all trace of ISDS measures
from the TPP deal was always something that late-comers like
PM Jacinda Ardern and Trade Minister David Parker were
unlikely to achieve.

Yet if we couldn’t remove ISDS
measures entirely, what we could do was make it harder for
foreign firms to access them. The Ardern/Parker aim in
Vietnam has been to severely restrict the conditions under
which foreign firms could trigger ISDS measures, and Parker
took at least three different routes to that goal.

Firstly, and as mentioned by Werewolf last week, there
are no ISDS measures within the existing NZ/Australia
investment protocol, and in the Australia /Japan and
Australia/US FTA deals. So the side agreement with Australia
on financial services that Parker has just announced in
Vietnam – whereby ISDS measures won’t apply to 80% of
foreign investment to this country – may be just the status
quo on steroids. To repeat: Australian foreign investment
here was already exempted from ISDS arbitration. Parker also
claims to have in train (but has not yet concluded) similar
bilateral ISDS exemptions with other TPP members.

restrictions on ISDS include: foreign firms that have been
excluded by the Overseas Investment Office from
participating in bids will not, in future, be able to appeal
to ISDS arbitration in order to win inclusion in contract
bids. This is entirely in accord with the final “gain”
made by Parker in Da Nang that puts extra pressure on
aggrieved foreign investors to seek redress in domestic
courts before dashing off to ISDS arbitration panels.
In particular, this will affect any foreign firm with a
government contract here ; they will not enjoy access to
ISDS arbitration, but will have to rely on domestic courts.

As yet is unclear whether access to ISDS measures is
ruled out forever and entirely; or whether these measures
can be triggered only after all domestic legal
avenues have been exhausted. Presumably, these rules will
have to cut both ways. Meaning: New Zealand investors
offshore will similarly need to exhaust local courts in the
countries concerned before they can appeal to ISDS panels.

Moreover, aggrieved investors will not be able to hedge
their bets, and mount access to domestic courts and to ISDS
panels simultaneously. On balance, this development is a
good thing. There was always a tinge of racism in the
assumption that while New Zealand courts are reliably free
from political or monetary influence, those foreign judges
just can’t be trusted.

As mentioned, all the
US-inspired IP changes foisted on the TPP about the terms
and conditions of copyright (and penalty regimes) have now
been frozen. These IP measures would have cost this country
an estimated $50 million a year directly, and would have had
a chilling impact on innovation. Copyright will now revert
to being for the life of the author plus 50 years, and not
for the ‘life plus 70 years’ duration that the likes of
Disney were pressuring the US trade negotiators to deliver.
Also frozen: the requirements on Pharmac to expose its
administrative decisions and procedures to legal challenge
by US pharmaceutical companies.

And in

Looking further ahead, ISDS measures
look like a thing of the past. Even the US wants to dump
them from NAFTA, and they’ve been set aside in the recent
EU/Japan deal, and the EU/Canada deal – because the
parties involved couldn’t agree to include them. As this
column has pointed out several times before, the EU wants to
scrap ISDS arbitration panels, and replace them with a
standing Investment Court that offers more in the way of
judicial independence, plus better rules of evidence,
disclosure and appeal rights. When New Zealand proceeds with
its planned bilateral trade deal with the EU, it will be
asked to scrap ISDS entirely and sign up to the Investment

That’s the route the Ardern government should be
taking – if it isn’t going to simply insist that foreign
investors will have to rely on our own local courts for
redress, take it or leave it. After all, if firms feel
nervous about that prospect, they always have the option (as
the US Trade Representative Robert Lighthizer recently said)
of taking out insurance against confiscation.

In sum,
ordinary citizens shouldn’t have to forego rights, pay
penalties and accept restrictions on the ability of the
governments they elect to pass laws, simply in order to give
certainty to investors, here and abroad. The Ardern
government needs to make the case for scrapping ISDS
measures in those terms – and not just try to restrict
their influence and impact.

The Hobbit, The

The new government is consulting on how
best to proceed in scrapping the infamous Hobbit law. This
is the 2010 measure that excludes workers in the local film
industry from enjoying the normal rights to collective
bargaining and workplace protections that are available not
only to other New Zealand workers, but to workers in the
film industry overseas. Elsewhere, union representatives and
Hollywood studios regularly sit down to hammer out
collective agreements. Only here is that activity seen to be

Presumably, one thing that will see daylight in
this review process will be the legal opinion that former
Attorney-General Chris Finlayson relied upon – and which
the Key/English government subsequently refused to release,
despite any number of OIA requests. This opinion was the
figleaf that the previous government relied on to claim that
collective bargaining with contractors would be illegal
under the Commerce Act. It will be fascinating to see how
robust that argument will prove to have been. Not much.
Otherwise, the previous government wouldn’t have hidden it
from daylight for so long.

Chances are, the revelation of
the contents of the legal opinion will further vindicate the
late CTU leader Helen Kelly. Every other belatedly released
document has. In 2011, Kelly set out the timetable for the
events that triggered the Hobbit

The solution to the legal problem cited
by Finlayson was clear enough, and the unions involved had a
Simpson Grierson analysis of the Commerce Act to that
effect. As Kelly argued in 2011:

Whatever form that
agreement took would need clearly to be in line with NZ law.
If performers were to be employed as employees, this could
take the form of a collective employment agreement and if
they were to be employed as independent contractors then the
agreement could be on a minimum standard contract which
would be offered to performers for negotiation.

2013, a dump of documents and emails entirely validated the
position Kelly had taken:

These emails show that all
parties to the negotiations were aware that the do not work
notice had been lifted two days before Sir Peter went public
and that the unions and Warners were in the process of
drafting agreed press releases to announce it. The emails
also show the union had agreed to hold its release until
Warners was ready. This is made clear from the email sent by
senior Warners executive, Stephen Carroll on the 18th of

That crucial email can be accessed here.

Basically, the
nub of Kelly’s position was that this dispute had been
resolved – and was known to have been resolved –
before the notorious anti-union marches were incited
around the country. As Kelly concluded :

A small
organisation with limited resources and a vulnerable
workforce, sought to enjoy what other workers in their
industry enjoy worldwide – the international right to
collectively bargain.

A major international
corporation combined with a powerful NZ film company, and an
anti- worker Government, to ensure there would not be union
bargaining in the growing NZ film industry.

In [the
end] a deal was struck without basis and against our
international legal obligations, that removed even the most
basic of work rights from the entire workforce (minimum wage
protections, Holidays Act, protection from unfair
dismissal). The Government and others lied to the people of
New Zealand in an effort to retain the perception of a
crisis in order to gain legitimacy for its actions. It was a
shameful moment in New Zealand’s political

Hopefully, the full details of this
‘shameful’ episode will now emerge. In 2010, we saw a
Supreme Court ruling effectively overturned, our employment
laws gratuitously changed and $30 million extra in subsidies
dished out to a foreign company – and people up and down
the country were lied to by those who knew the dispute had
already been settled, and well before anti-union (and
anti-Australian) sentiment got whipped into a frenzy. In
reality, Hollywood studios deal with collective bargaining
all the time. The deciding factor about a location is the
extent of tax incentives on offer. These incentives and
grants remain for projects like the Avatar sequels
and Mortal Engines alike.

What will need to be
sorted out by the new government are the tax write-off
provisions for “contractors” once they become legally
recognised as “employees.” It will be important to
ensure that these workers are properly compensated for the
costs they currently shoulder as contractors, while and
after they make the transition. That difficulty however,
pales in comparison to the problems inherent in the status
quo – whereby one of our leading digital industries of the
21st century continues to labour under 19th century work

Endless Road

Since the
TPP seems an endless road…what better song to celebrate
the lonesome endurance involved than this number from the TV
series Bonanza, sung in a bracingly bromancing
fashion by Pernell Roberts and Hoyt Axton. This “Endless
Road” song was written by Axton’s mother, Moe Boren
Axton, who also wrote Elvis Presley’s smash hit
“Heartbreak Hotel”. Angel Olsen has included a cover of
this song in her recently released album of rarities and
B-sides. Apparently, she came across it while watching
Bonanza re-runs with her mother.

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